Bangladesh has granted letter of intent (LoI) to GMR to sign power purchase agreement (PPA) to buy 500 megawatts (MW) of electricity from the 900-MW Upper Karnali Hydro Electric Project (UKHEP), the first Nepal, India and Bangladesh – three country – joint hydel project.
The project head of Upper Karnali Hydro Electric Project KK Sharma confirmed that the LoI has paved the way for the project to ink the financial closure with various banks and financial institutions. “The LoI means that the Bangladeshi government has finalised all necessary legal issues to materialise the plan to buy energy from us,” he said, adding that the Bangladesh government had already – on December 18 – finalised the PPA rate with GMR. “At that time the Cabinet Committee on Public Purchase of Bangladesh had approved power purchase agreement rate to purchase 500 MW of energy generated by the project.”
Bangladesh has confirmed to import 500 MW of electricity through Indian firm GMR at a tariff rate of 7.72 cents (Rs 8.80 IC) per unit for a period of 25 years. The development of the project is going to open doors for the first-ever trilateral power trade, apart from ending suspicions that the project will never materialise.
The company is planning to complete the necessary works for the PPA within the next four months and by the next six months the project will ink the financial closure agreement, Sharma said, adding that the company will be able to sign the PPA in June, if everything goes as planned. “The buying entity will enter into a PPA for the purchase of the electricity at the rate of 7.712 cents per unit for a period of 25 years.”
The company also plans to complete the process of engineering, procurement and construction (EPC) and award the contract to the selected firm by March.
The Upper Karnali Hydro Electric Project will be the first Nepal-based private company to export hydropower to Bangladesh through India according to the trilateral agreement. The project also plans to develop its own transmission line to evacuate the electricity it generates in Nepal. The power generated from the plant will be evacuated through a 400 kV double circuit transmission line up to the interconnection point of Power Grid Corporation of India, in India. The Indian party will get IC 4 paisa per unit as a trading margin for transmitting the power to Bangladesh. The supply of power to Bangladesh from India is expected to become exemplary in terms of regional power trade agreement.
Estimated to cost around $1.5 billion, the company plans to collect 15 per cent of investment through Nepali banks and financial institutions (BFIs). It has already signed initial agreement with Nabil Bank and Nepal Investment Bank, which are interested to lead the debt consortium for the 15 per cent financing. “The project is in talks with the Indian Exim Bank, Chinese Exim Bank, Asian Development Bank (ADB), World Bank (WB) and Netherlands Development Finance Company and other multilateral lenders for the remaining project financing.”
The run-of-the-river hydropower project was awarded to the Indian Group through an international competitive bidding process in 2008 on a build, own, operate and transfer model as an export-oriented project aimed at the Indian market. Nepal will receive 27 per cent free equity and 12 per cent free energy from the project. Nepal will receive 108 MW out of the remaining 400 MW for free, while GMR plans to sell the remainder to the Indian government.
Expected to complete about five years, the project developer has to transfer the full ownership of the project to the Nepal government at the end of the 25-year concession period.
The project head of Upper Karnali Hydro Electric Project KK Sharma confirmed that the LoI has paved the way for the project to ink the financial closure with various banks and financial institutions. “The LoI means that the Bangladeshi government has finalised all necessary legal issues to materialise the plan to buy energy from us,” he said, adding that the Bangladesh government had already – on December 18 – finalised the PPA rate with GMR. “At that time the Cabinet Committee on Public Purchase of Bangladesh had approved power purchase agreement rate to purchase 500 MW of energy generated by the project.”
Bangladesh has confirmed to import 500 MW of electricity through Indian firm GMR at a tariff rate of 7.72 cents (Rs 8.80 IC) per unit for a period of 25 years. The development of the project is going to open doors for the first-ever trilateral power trade, apart from ending suspicions that the project will never materialise.
The company is planning to complete the necessary works for the PPA within the next four months and by the next six months the project will ink the financial closure agreement, Sharma said, adding that the company will be able to sign the PPA in June, if everything goes as planned. “The buying entity will enter into a PPA for the purchase of the electricity at the rate of 7.712 cents per unit for a period of 25 years.”
The company also plans to complete the process of engineering, procurement and construction (EPC) and award the contract to the selected firm by March.
The Upper Karnali Hydro Electric Project will be the first Nepal-based private company to export hydropower to Bangladesh through India according to the trilateral agreement. The project also plans to develop its own transmission line to evacuate the electricity it generates in Nepal. The power generated from the plant will be evacuated through a 400 kV double circuit transmission line up to the interconnection point of Power Grid Corporation of India, in India. The Indian party will get IC 4 paisa per unit as a trading margin for transmitting the power to Bangladesh. The supply of power to Bangladesh from India is expected to become exemplary in terms of regional power trade agreement.
Estimated to cost around $1.5 billion, the company plans to collect 15 per cent of investment through Nepali banks and financial institutions (BFIs). It has already signed initial agreement with Nabil Bank and Nepal Investment Bank, which are interested to lead the debt consortium for the 15 per cent financing. “The project is in talks with the Indian Exim Bank, Chinese Exim Bank, Asian Development Bank (ADB), World Bank (WB) and Netherlands Development Finance Company and other multilateral lenders for the remaining project financing.”
The run-of-the-river hydropower project was awarded to the Indian Group through an international competitive bidding process in 2008 on a build, own, operate and transfer model as an export-oriented project aimed at the Indian market. Nepal will receive 27 per cent free equity and 12 per cent free energy from the project. Nepal will receive 108 MW out of the remaining 400 MW for free, while GMR plans to sell the remainder to the Indian government.
Expected to complete about five years, the project developer has to transfer the full ownership of the project to the Nepal government at the end of the 25-year concession period.
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